US crude exports jump sixfold as Canadian refiners tap into shale boom

The US shipped 268,000 bpd in April, the Energy Information Administration reported Monday. That’s the most since April 1999, and a more than sixfold increase since April 2012.

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By DAN MURTAUGH and ELIOT CAROOM

Bloomberg

Oil exports from the US in April rose to the highest level in
15 years as Canadian refineries replaced more expensive
imports from Europe and West Africa with shale
oil from North Dakota and Texas.

The US shipped 268,000 bpd in April, the Energy Information
Administration reported Monday. Thats the most since
April 1999, and a more than sixfold increase since April
2012. Federal law allows exports of unrefined crude to Canada
and restricts them to most other destinations.

The increase in exports follows a boom in oil production
driven by horizontal drilling and hydraulic fracturing, or
fracking, in places like North Dakota and Texas. The surge in
output has increased supplies in the US, driving down prices
relative to the rest of the world.

The boom in US production caused a price differential
to grow between foreign crude and US crude, said Carl
Larry, president of Oil Outlooks & Opinions in Houston.
The margins for US crude are just so good that
theres no reason a Canadian refinery wouldnt want to use
it if possible.

US crude output rose to 8.47 million bpdin the week of May
23, the highest level since 1986. Eagle Ford light crude in
south Texas sells for $9.71/bbl less than Brent, the
benchmark for European and African oil,
according to data compiled by Bloomberg. It costs
$2/bbl to ship crude from Texas to Canada, Marathon Petroleum
said in a May presentation.

Canadian Refineries

Exports to Canada from the US Gulf Coast averaged 134,000 bpd
in the first quarter, according to the EIA. March US exports
were 246,000 bpd.

Refineries on Canadas East Coast are designed to
process light, low-sulfur crude like the type produced by
fracking in the US, said Hannah Breun, a Washington, DC-based
analyst for the EIA. Plants on the US Gulf Coast are
generally better suited to refine thick, high-sulfur crudes
from Mexico, South American and Western Canada.

Corpus Christi, Texas, the closest port to the Eagle Ford
field, shipped out 468,000 bpd in April, according to data
from the citys Port Authority. Thats up from
15,000 bbl two years earlier. About 80% of that oil stays in
the Gulf Coast, with the rest going to Canada and the US East
Coast, according to Brad Barron, CEO of NuStar Energy.

Refineries in Ontario, Quebec and Canadas Atlantic
Coast imported about 615,000 bpd in February, according to
the countrys National Energy Board. Under current
export rules, shipments to Canada from the US will rise to
400,000 bpd in 2015 and stay at that level through 2020, said
Damien Courvalin, a New York-based analyst for Goldman Sachs.

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California has elected to put a $.06 per gallon tax on crude oil delivered either by pipeline or railroad. This will keep out of state refineries even busier, while California (again) shoot itself in the foot with job loss.